INU Exports Private Limited Vs ITO (ITAT Mumbai)
The Income Tax Appellate Tribunal, Mumbai Bench deleted a ₹15.19 crore penalty levied u/s 270A. The issue was straightforward. The AO treated a business loss as speculative loss and proceeded to levy penalty for alleged under-reporting of income.
The Tribunal held that:
- The loss was fully disclosed in the return
- There was no concealment or furnishing of inaccurate particulars
- The AO merely changed the head under which the loss was classified
A change in classification, by itself, does not attract penalty.
Reiterating settled law, the Bench observed:
Penalty proceedings require proof of culpable conduct, not merely an addition in assessment.
Tribunal rightly applied the law stated in CIT vs Auric Investment & Securities Ltd (2009) 310 ITR 121 (Delhi). We find that in CIT vs Auric Investment & Securities Ltd, the Hon’ble High Court held that mere treatment of business loss as speculation loss by AO did not automatically warrant inference of concealment of income. It was also held that there was nothing on record to show that in furnishing its return of income, the assessee either concealed its income or had furnished any inaccurate particular of income. Kolkata Tribunal in DCIT Vs Shree Ram Electroplast (P) Ltd (supra) also held that merely because losses were not allowed to be set off against normal business income and was treated as a speculative loss, it was only a change of sub-head of loss and not furnishing of inaccurate particulars of income invoking penal provision. Thus, in view of aforesaid factual and legal discussions, we do not find any justification in levying penalty under section 270A for treating the assessee of guilty of under reporting of income.
